A week after posting a huge first-quarter loss and saying the company needs to raise cash, Tesla is doing just that. The company said Thursday that it’s offering $650 million of common stock and $1.35 billion in convertible senior notes due in 2024 in two separate offerings.
The company anticipates gross proceeds of about $2.3 billion, before discounts and expenses. CEO Elon Musk will participate, buying $10 million worth of stock, the company said.
Last week, Tesla reported its cash balance at the end of the first quarter shrunk by $1.5 billion since December, to $2.2 billion. Musk said during a conference call that Tesla might need to raise capital again. The company will use the proceeds “to further strengthen its balance sheet, as well as for general corporate purposes,” according to a press release.
Tesla shares jumped more than 4 percent at the opening bell, to $244 per share. Some analysts said the move was necessary given the company’s operating needs.
“We view this as a clear net positive for Tesla as the company needed to take its medicine and clear the air of the very real investor worries that the company would not having enough capital to meet its debt obligation this November,” Daniel Ives of Wedbush said in a note.
However, worries remain about Tesla’s profitability in the broader economic picture. CFRA’s Garrett Nelson reiterated the research firm’s sell rating on the stock, writing, “we continue to believe TSLA will be hard-pressed to hit vehicle sales guidance in the face of the ongoing phase-out of the federal EV tax credit, and competition is a major concern with dozens of fully or partially electric vehicles set to come to market.”